Laroe Estates, Inc. v. Town of Chester
828 F.3d 60
| 2d Cir. | 2016Background
- Sherman sued the Town of Chester alleging a regulatory taking involving the MareBrook development; the Second Circuit reversed a district-court dismissal and remanded for merits (Sherman previously decided on ripeness).
- Laroe Estates claims it contracted to purchase the development lots from Sherman (2003 Agreement), advanced >$2.5M, and amended the deal in 2013; TD Bank foreclosed in 2014 and took possession.
- After remand, Laroe moved to intervene in Sherman’s suit as equitable owner; the District Court denied the motion as futile, concluding Laroe lacked Article III standing to bring a takings claim.
- The District Court also questioned timeliness but did not fully adjudicate the Rule 24 factors because it rested denial on standing.
- Laroe appealed; the Second Circuit held that a proposed intervenor need not independently satisfy Article III standing when an existing party presents a live case or controversy, and remanded for the district court to decide Rule 24 issues in the first instance.
Issues
| Issue | Plaintiff's Argument (Laroe) | Defendant's Argument (Town / District Ct.) | Held |
|---|---|---|---|
| Must a proposed intervenor independently satisfy Article III standing when the underlying case presents a live case-or-controversy? | No — if the underlying litigation satisfies Article III, an intervenor need not show independent standing. | Yes — a proposed intervenor must demonstrate Article III standing (District Court relied on this). | Held: No; proposed intervenor need not independently show Article III standing when existing parties present a case or controversy. Remanded to assess Rule 24. |
| Can lack of independent claim or failure to state an independent claim defeat intervention? | Laroe: It may participate if it asserts the same legal theory/relief as the existing plaintiff (Trbovich). | Town: Laroe’s claim would fail on the merits/Rule 12(b)(6). | Held: Failure to state an independent claim does not automatically bar intervention if intervenor seeks same relief and theories as existing plaintiff. |
| Did the District Court properly deny intervention as futile based on standing and merits? | Laroe: Denial was error; court should have applied Rule 24 factors first. | District Ct/Town: Futility appropriate because Laroe lacked standing/vested interest. | Held: Denial was erroneous; futility based on standing or merits was improper without first applying Rule 24. Case remanded. |
| Does Laroe satisfy Rule 24(a)(2) (timeliness, interest, impairment, adequacy of representation)? | Laroe: Timely enough given litigation posture; has direct, substantial, legally protectable interest; Sherman may be unable/unwilling to litigate. | Town: Untimely, lacks a vested interest at time of taking, and Sherman adequately represents interests. | Held: Record insufficient on Rule 24 factors; remand for district court to resolve timeliness, nature of Laroe’s interest under NY law, impairment, and adequacy of representation. |
Key Cases Cited
- Sherman v. Town of Chester, 752 F.3d 554 (2d Cir. 2014) (Second Circuit reversed district court on ripeness and remanded takings claim)
- United States Postal Service v. Brennan, 579 F.2d 188 (2d Cir. 1978) (intervenor need not show independent standing where case-or-controversy exists)
- Trbovich v. United Mine Workers of America, 404 U.S. 528 (1972) (party may intervene on plaintiff’s side without asserting separate grounds so long as it pursues same relief/theories)
- McConnell v. Federal Election Commission, 540 U.S. 93 (2003) (Supreme Court did not decide intervenors’ standing where named defendant had standing)
- Diamond v. Charles, 476 U.S. 54 (1986) (intervenor who wishes to appeal in place of an existing plaintiff who won’t appeal must show Article III standing)
- MasterCard Int’l Inc. v. Visa Int’l Serv. Ass’n, 471 F.3d 377 (2d Cir. 2006) (framework for reviewing denial of intervention motions)
- Washington Elec. Coop., Inc. v. Mass. Mun. Wholesale Elec. Co., 922 F.2d 92 (2d Cir. 1990) (Rule 24 interest must be direct, substantial, and legally protectable)